Read on for the first 69 minutes of our 2-hour conversation here.
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Peter Bell: Hello I'm PETER BELL and I'm here with Mr. CHAD PETERS. Hello Chad!
Chad Peters: Hi Peter. How are you doing?
Peter Bell: Very well, thanks. You're the President and CEO of RIDGELINE MINERALS is that correct?
Chad Peters: That is correct.
Peter Bell: Congratulations on your first week of trading here.
Chad Peters: Thanks. It's been pretty good and we're happy with how it has performed so far.
Peter Bell: We've got a news release up from August 20th that shows you coming screaming out of the gate.
Chad Peters: Kicking and screaming out the gate! We put out a press release when we closed our IPO announcing our drill program at SELENA. Then, we put out another one on the 20th talking about getting our permit for our SWIFT project which is really exciting. It is a BATTLE MOUNTAIN / CORTEZ trend type of exploration project that has a lot of potential. We're pretty excited.
Peter Bell: You've been doing some marketing to launch -- good job. And the market is supporting a $30 million dollar valuation here.
Chad Peters: Thanks. I was happily surprised by how the stock did this week. We're still a small company don't have the story out there yet so the fact that we had some solid trading and supported the stock was pretty awesome to see and where was the IPO 45 cents so we actually opened I believe I believe our first open was at 54 I think on Monday morning and then and we haven't gone below that since so pretty happy.
Peter Bell: Prior rounds when you were when you're a private company what kind?
Chad Peters: We did a 12 cent seed round in May of 2019. That was heavily supported by Haywood Securities and a lot of the early guys that supported the company like Dave Elliott and Andy Williams out of Haywood. Our own team bought probably more shares than we should have, but we all supported it pretty heavily. Then, on top of that, we had some incredible guys like Ewan Downie, Ron Little, and a whole bunch of great groups that supported us early. It was great. We had a 12 cent round, a 22 cent round in December 2019 and February 2020 -- we broke it into two tranches because we went to raise more in November of 2019 and got pushed back, pushed back, and then we split it up because December was a tough time here to get something fully closed. We ended up splitting it across two tranches, but it worked out well and we raised almost three million bucks.
Peter Bell: Well done. August is a difficult time, too. July was screaming but August is always different. Good to see a healthy reception in the market for you there.
Chad Peters: It seems like the way things have been so volatile lately. One week it's like, "I wish the IPO was now!" And then the next week is "Thank god we didn't IPO -- gold is down $180?" Lots of volatility.
Peter Bell: Important to have a steady hand on the wheel at these times right. And a young team here, but it sounds like a competent team. You have lots of good eyes on and good people involved. Some good chatter on ceo.ca here that we're looking at. Let's have a look at this VRify deck and see what we see. They do great work.
Chad Peters: There's no doubt about it, they do. We jumped on that bandwagon early even as a private company I had to fight a little bit with a few folks initially to say we needed even as a private co. we need to have a VRify deck, but I think it's because we're getting that story across and trying to be we're trying to be transparent with all this everything we're doing right.
Peter Bell: I'm looking out at this picture this is the view from one of your projects.
Chad Peters: This is the view actually that's right off the edge of the drill pad on our at our CARLIN EAST project the hole we drilled last year that proved our geologic model and showed that the lower plate host rocks ratcheting about only about 800 meters down instead of the 1,500-2,000 meters that Newmont had previously thought that the target area would be. As you're looking, it's an incredible view. You're looking right at the GOLD STRIKE pit, which is in and around 40 million ounces and still a producing mine.
Peter Bell: How did you get this ground here.
Chad Peters: That's a good question. It was a funny start to the company. I co-founded the company in 2019 with a drilling company, which was a great story. Everyone loved the idea, but we needed some ground to back it up. That was a tough thing to find -- we were still trying to figure out what was the right project and the right fit for the company. I had a couple failed land deals that didn't go through. Learned a lot about negotiating land deals. In late 2019, we actually hooked up with EMX guys and that's when things really started rolling. I pitched them on our SELENA project and they loved the business model. They said, let's not just do one -- let's actually spin three projects out into the company. I didn't even know about these other two projects. They'd actually been holding these projects a little bit behind the scenes and not marketing them heavily. The SWIFT and CARLIN EAST were not projects that they were pushing to the average group in the market in general because they wanted to see it spun into a company that they could then take an equity position. They call it their accelerator model. I started looking into it I and was like, "Oh my god, these projects are incredible. They have huge potential." We ended up doing the deal and they took ten percent of the company. Our value at the time was pre-money was $750,000. Essentially, we optioned 20, 000 acres of ground in Nevada for a very reasonable price and what it allowed us to do was go in and put the money in the ground. The deals are very back-end loaded. They took ten percent of the company right off the top, but we don't have any work commitments or anything like that to satisfy. Once we completed our IPO and raised two and a half million bucks those were the two contingencies that EMX set as part of the land deal. If we could prove that we could raise enough money to advance the projects and take the company public, they felt confident that we could use the money as we saw fit to actually explore the projects. It worked out really well.
Peter Bell: Did they include an anti-dilution right for themselves?
Chad Peters: They did. That first two and a half million was a carried interest. We had to raise two and a half and they got a carried interest in it. Right before the IPO, we satisfied all that in our second tranche of the second round. They participated in the second round and I'm sure that they'll be maintaining their 9.9%, buying back in and getting it back up to 9.9%. They sunk just a little below 9.9% on the IPO but they've got a lot of deals in the mix right now.
Peter Bell: They've got a lot of cash too!
Chad Peters: It was amazing how we ended up on the IPO -- I think we had $12 million in orders in the first seven days. We were trying to raise two million dollars. The base amount was two million and we just couldn't have gotten any luckier than we did when we started kicking off the IPO. We were planning on doing the IPO in April and that was not a good time after COVID hit. I got a voicemail from one of the guys at Haywood who just said the IPO is off. We didn't even get a chance to chat, I just checked my voicemails, "Hey man, the IPO is going to have to wait." Tough, but we ended up IPO-ing into a way stronger market and had a lot of interest on the IPO, which is great. We up-sized to five million, which meant that we actually cut back more money than we actually ended up taking in. That was all because we felt that at 45 cents we were undervalued and $5 million was the maximum amount of dilution we were willing to accept at that valuation.
Peter Bell: What was the valuation where you took in the five?
Chad Peters: The valuation of five would have been 21 million. At 45 cents, our pre-money valuation was about $15M. I think it worked out well. I think the first week so far helped support the idea that we were undervalued and hopefully we're able to maintain that.
Peter Bell: There has to be upside it can't be all baked in already, right?
Chad Peters: I made that mistake when I started the company. My wife asked how long will it take to get financed? I said I don't know, probably six months -- it can't be that hard, right? I learned a lot after that and realized I had the company way overvalued back in the early days. When you build something yourself you put a lot of value on it and unfortunately, not everyone else feels the same way. I had a lot of failed pitches to different groups who all said the same thing -- we like you, we like the company, we think it's a great idea but you're overvalued and we're not in. It took about eight months to take a step back and lower the valuation by 70 percent, give or take.
Peter Bell: Wow!
Chad Peters: That's right. When I decided my company's not worth as much as I think, we hooked up with the EMX guys. They were huge. I went to them at that point and asked what do you think we're worth -- how do you value something that has no value, right? It's just an idea and a shell. They were great. They said, look we think you're somewhere between $500,000 and a million. We went to Haywood, got introduced to the Haywood guys after that through the EMX team, and they said the same thing -- so we settled in the middle.
Chad Peters: I think something that maybe sets us apart from a lot of different companies is our seed round shares. We didn't issue seed round shares. We incorporated in March of 2018 but we didn't actually issue any seed round shares then. We just kept the minimum hundred shares for myself and my founder. We only issued shares once we actually had the seed round lined up. We said, "Okay, our value is 750,000 pre-money and we're doing the seed round at 12 cents so let's just cut 6.25 million shares for Chad and Steve to call it square." That was our founder's shares. I'd like to think that we didn't just go and say let's each take 5 million shares or 10 million shares or whatever dirt-cheap shares. We've tried to maintain right from the very start of the company that we're aligned with shareholders and the only way we make money is if we get that stock price up.
Peter Bell: Those foundational decisions are so important
Chad Peters: I felt like it maybe wasn't a choice at the time because that was a heavy suggestion from them. They were right! Dave Cole, Dave Elliott -- all these guys said if you want to set yourself apart then start treating your company like you give a shit and you own it, which we did. I was treating it very much like that way but they just said look a big problem with the industry is that people are not aligned with the shareholders. No-one's gonna invest in you if they don't think you're gonna kill yourself to make it a success and I think that was the right approach. It's worked out well I might have been paraphrasing a bit there but that was the general conversation.
Peter Bell: It's funny to me that it's your first time out, too. You have these failed attempts you mentioned, but really first time out in a lot of ways. Maybe you're learning quickly or what it was that we'll learn the hard way on a few things.
Chad Peters: For sure. I think probably half the folks in the gold space probably felt the same way. In 2017-2018 it felt like things were turning I meant I remember I went to 2018 the roundup and like everybody was excited and I was like okay perfect like maybe we're maybe the markets are going to turn right and it ended up being 2018 was a brutal time to raise money I didn't raise a dime, luckily I think to be honest. I ended up not burning good shareholders.
Peter Bell: That's key.
Chad Peters: I worked my way through a lot of you what you might call fringe investors -- people where it was probably a good thing the deals didn't work out because if it didn't work out maybe my kneecaps were going to get broken. I think re-shifting the focus and properly valuing the company was huge. For the first time, I've been lucky enough to just I worked for Ewan Downie and those guys for years. I was able to build a pretty good network of folks that you call it what you want they're definitely mentors. Over the last 10 years my career and stuff so the whole way along I was probably blowing up their phone more than they appreciated -- what do you think of this. That's a stupid idea. That is also a stupid idea don't do that thing. Worked our way through it and it worked out really well. We've got a good team now. We've got great shareholders. I was lucky enough, I convinced our VP Exploration MIKE HARP he was working for GOLD STANDARD VENTURES for years. I think he started with them when they were 15c stock in like 2010 or 2011, pretty much their first six months of existence. He came right out of school and he knew what it was like to work for a junior for right from a startup. GOLD STANDARD found a bunch of gold, especially over the last five years with multiple discoveries. Mike was a big part of making those discoveries. I called him up in 2019 and showed him the projects that EMX had -- we hadn't closed the deal yet but I said if I were to get these what do you think? He just wrote back and goes I'm in! Close the deal and I'm in. It was funny because I called him up and said "Okay, I closed the deal and we raised a million and a half bucks but I need you to take a $40,000 pay cut." He was like, "Oh, okay..." I said, "The only thing I can tell you is that I'm gonna take the exact same pay cut. We will make the same amount. And if you wanted to invest in the seed round that would be awesome, too." He ended up he called back like an hour later and goes yep we're in and we'll invest in the seed round as well. He's been narrated from the start and it's been awesome.
Peter Bell: When you have a project like this right you wait for your fat pitch and you see it coming and you just line it up.
Chad Peters: All three of them are pretty exciting in their own way but you can't stand up on the hill on the CARLIN EAST and not get a little excited.
Peter Bell: Before diving into it, I wonder about your exploration approach here. You've you said you drilled and demonstrated the proof of concept, I wonder do you jump down the line and start drilling some more holes in that horizon and trying to start shipping or off to somebody else for test work?
Chad Peters: You could definitely go that route. I think we're trying to stay away from at this point I think on getting too far advanced down the projects do we understand the scale so I think the first step is going to test that horizon if we have some success obviously it's going to be something that groups like Nevada Gold Mines be pretty excited about. It's like literally two and a half kilometers from a four billion dollar mill, which they're scrambling to keep full essentially. The goal for us would be if we can find something exciting there and it really depends on what we were to hit but at that point, any drilling that we do wouldn't be necessarily focused on resource delineation I'd like to take the route that like GREAT BEAR took, for example. Not to say that this is a direct analog to that although I hope it would be. I think they did an incredible job. They made that discovery at the LP zone and DIXIE, but they didn't just focus on drilling-off this one new discovery to maybe find a two million ounce discovery.
Peter Bell: For seven dollars an ounce finding costs, maybe.
Chad Peters: Right. They came in and said let's just see how big this thing could actually get and I think they've done an incredible job of showing that this thing's their target is probably another HEMLO or something. Our goal would be the same thing. If we make a discovery define what may be the blue sky of it could be and then we start digging into working on it if we think it's worth it.
Peter Bell: Cejay Kim is out there and he made a tweet on that line recently he was saying something like the old school approaches get to a resource as quickly as you can new school approaches make it as big as you can and let the market speculate on the resource numbers. I like that. I'm with him on the new school approach there and what you're saying glad to hear you say it as well if I could add one thing to that whole discussion it might be data, data, data. If you take all the data that you generate from your work programs and you make it available to this community online of people -- some of them are resource modeling experts and they can do the geostatistical modeling very well on their own, thank you very. You can crowd-source it in a way. If you do that then you get imagine you get a bunch of different people working on different models of different based on the data rather than the one consultants coming up with their official report. That's one thing that I would suggest to really make that new school approach a little bit more robust or a little bit more engaging for that crowd is if you really make all of your data available. I'm talking the full drill logs and assay sheets from the whole all of the holes all the entire lengths that you've assayed. With the cloud, you can make so much data available now.
Chad Peters: That's a cool idea for sure. I think that the verify what we're doing with VRify it's that first step we don't actually have a whole lot of we don't have a lot of hopefully early days very great days we'll have some drill intercepts soon but we do that part of that whole data thing that I again going back to like GREAT BEAR as an example that I think they've done a great job. They spent a couple of years putting the old historic data together, re-logging holes and stuff. That's what we're trying to do here. At SWIFT, for example, we've found old core that was drilled from 1999 from PHELPS DODGE and that's the drill intercept we have of 17 meters at 0.7 grams. We actually have that drill core. I have it sitting in my office right now and to be able to look at it, go back and relog it... They hit 17 meters in that and BARRICK didn't even know! I talked to some BARRICK folks and data gets lost in Nevada. It's not like Canada where that stuff gets put on the public domain. You have companies that have come up, done all the work, and then just thrown it in the garbage or it got lost in a warehouse somewhere.
Peter Bell: Sitting in somebody's garage! There's some prospector who's ended up with the patented claims somehow and he's got the old reports -- paper copy only and nobody's looked at them in 20 years.
Chad Peters: We found this ELY GOLD ROYALTIES on this core so we ended up and it was a hole that was 3000 feet deep so that's a $250,000 hole. We bought that core for 10 grand. It's just little things like that you can do to build out your data ahead of the time I think huge so we're working on a lot of that is the last two years have been putting the story together raising the money so that we can do all that baseline work and then so the whole point of it is at the end of the day we don't want to be throwing pot shot holes out there like the holes of CARLIN EAST they're expensive they're not cheap. It's shareholder money! What are we doing -- if you're not drilling a hole for a direct reason to make a discovery every time, then you shouldn't drill that hole. I've heard stories of people saying we drilled a strat hole -- a three thousand foot strat hole. Okay, that was easily a three hundred thousand dollar hole. That's an approach that you can take, no doubt about it. You learned something from it but if you went back to shareholders and said hey I drilled this hole just for the hell of it just because I'd like to make sure know exactly what type of rocks we're in that's definitely an important part of it, but if I'm going to do a strat hole I'm going to try to plug that strat hole into something that also could be carrying grade. It's just a different it's our approach.
Peter Bell: I've been reading Sig Muessig's EXPLORATION CANONS a lot lately and there are lots of valuable lessons in there for people who are geologists -- they always need to read that again, I think -- and people who aren't geologists, too. I know there are lots of investors out there sometimes we get baffled and confused by what companies are doing and sometimes that's for a good reason. Some companies don't seem to know quite what they're doing or what they should be doing. It's tough.
Chad Peters: Especially in the tough markets, too. You end up with is people cutting corners which I think is why a lot of discoveries why you're getting a lot of money getting wasted and discoveries dropping right is because you have groups that are they're hogtied in a way right it's like well if you're only able to have raise a million bucks and that you need to do 2 million worth of work to actually properly advance that thing but at the same time you also know that if you don't put out results your stock's going to drop even farther you end up doing partial work and it's no it's in a lot of cases it's not always anyone's it's not their fault or a bad thing right it's just the sign of the times you're in so I think lucky to be that we IPO'd into a better market that we can have a little bit of flexibility I think to some degree.
Peter Bell: It is their fault, too. To some degree, it's a function of behavior and having a playbook. Do you really know what you're doing? Are you making it up as you go? There's room for that in exploration -- it's an adventurous business but for a lot of investors trying to be disciplined with this stuff too and they appreciate it I think when management have that that the same attitude.
Chad Peters: I totally agree. That comes back to the drilling contract. There's a million juniors out there that think they have a good idea, so how do you separate yourself from the pack and actually show that you're spending shareholder money properly -- that you actually care about their money? I think that the drilling contract was a good start for us. The rest of it was just a lot of the basic things we're doing. I got given a hard time one time from a guy that said, "Well, this looks like an obvious drill target -- why are you doing the soils? Why are you doing the geophysics? There's already a drill hole here. Let's just drill it. Why are you wasting a hundred thousand dollars doing that stuff?" My point back was like well it's you're right you could go put a drill hole there and you might just get lucky because that's what it would be right it would be like an inferred guess would be about where you're putting that hole but in my eyes, we spent that hundred grand we did the work and now we're absolutely sure where we want to be putting that hole and if you'd asked me six months ago where that hole was gonna go it's not where it's going today or in September right so when you're talking about $150,000 holes well just one poorly planned whole page for the entire baseline work. I think it's a business model that's worked for us and luckily we have some we've sold the story to the shareholders that have come in on the IPO and previously on the private rounds. Look, we're doing these things systematically -- it's all part of the exploration process and you're not going to see we're not going to drill these things for quick flashy results. We're looking for economical deposits. To get to that point requires a certain amount of work to get there and luckily we have the support of the Board. They've been supportive. Mike was a big driving force behind that general concept. It's worked out well for us and we're just going to try to keep executing.
Peter Bell: Mr. Mike Blady a big shout out to him. Well done.
Chad Peters: Mike has been awesome. He's been a big part of the company.
Peter Bell: You've got to be focused when you have 100 plus square kilometers of ground in Nevada, right?
Chad Peters: That's right. We could drill 80 poorly planned holes and still not kill off a target or kill off an entire project when you're talking 116 square kilometers. It's all about ranking. LEWIS TEAL is one of our board members and he was with NEWMONT for 25 years. He got really into the systematic ranking of projects and targets. We go through that regularly with him and a few other guys. We call it peer review. Guys that have been doing it for years come in and pick holes in what we're doing, then we go through it all and rank each target. Then we rank all the targets within a project and we rank those projects from top to bottom, as well. If you had talked to me in February, then it went CARLIN EAST, SWIFT, and then SELENA. Then we went and started working on our SELENA project. In the spring, we trenched 50 meters of 0.6 g/t Au across an untested drill target, which we're drilling right now. Suddenly, SELENA goes a little bit up in the ranking. I think in big picture CARLIN EAST and SWIFT are still our top two projects but SELENA just keeps on getting more and more exciting. We're getting great rock chips at surface, widespread alteration, and mineralization. For a project that's been forgotten about for 25 years, it's pretty exciting to come in and be able to get it back up and going again.
Peter Bell: When would you let somebody else start earning into one of these, like CARLIN EAST would you let somebody else pay for those big deep expensive holes?
Chad Peters: That's a good question. I think depending on what we're able to show with our drilling in the next six months it's highly like if we hit into something really truly amazing you can go out and raise the money to do it but I think like a project like CARLIN EAST that's the project that will take 20 million dollars 25 million dollars if you make a discovery to turn it into the next GOLD RUSH or the next FOUR MILE big discovery. If you were to get it to that point, it's going to be huge. I'd rather bring on a partner at a the right time at the right valuation to make sure that we get that value for the company, but if I can hold a 40 retained interest on something and let someone else take the risk and the dilution -- right now we'd have to double or we'd have to raise our current market cap just to advance the project.
Peter Bell: But then you're in the driver's seat too, right? Then there's that thing about well we like our process, we think we're going to do it better than they are, blah blah blah.
Chad Peters: I think that every project is different. It comes down to what you hit, right? If you hit something truly amazing then you can really put the screws to whoever's coming in -- you can say, no I want to see $20 million going in the ground in the first two years or we get the whole project back.
Peter Bell: And we want Lew Teal to have veto power over every hole. Sorry, non-negotiable.
Chad Peters: Exactly. Lew is actually one of the senior geos in charge of the discovery of the Leeville deposit, which is just three kilometers away. Him and Mack Jackson with that whole team there. Mack is actually doing mapping for us now. He's the ex-Vice President of Exploration for Gold Standard Ventures. He's been mapping our SWIFT project for us. With 100 square kilometers, we're bringing three full-time geologists working for the company. We've had to bring in guys like Mack and Lew to help us advance the projects. We've got a good team for sure.
Peter Bell: Is he still working for the Newmont Carlin Trend Exploration Group?
Chad Peters: No, Lew is retired now. Lew was with them for 30-odd years. He actually was the group executive for South America on the exploration side for Newmont for almost seven or eight years, I think. He's got tons of global experience, found a bunch of gold in Nevada back in the '90s and 2000s, and then moved down to South America. If you talk to him about Leeville, for example, he still remembers the grade and thickness of the original holes. He's pretty tuned into that stuff.
Peter Bell: I'm starting to wonder about when we'll see some of those bigger companies doing more with the juniors on strategic relationships. The example of the land package you guys have at CARLIN EAST, for example.
Chad Peters: I think it's starting to come around. Luckily, I was part of the team with PREMIER GOLD that had BARRICK take over and joint-venture into the McCoy-Cove project. I actually led the transition for the PREMIER side when BARRICK came in. I got to know that the whole team really well and they're awesome. Part of the reason why I started RIDGELINE is that I spent six months working with them when they came into McCoy-Cove and the first things they said was, "You didn't do your full soils." Great, right? They said, "We're doing property-wide of everything."
Peter Bell: Wonderful. I love it.
Chad Peters: We did it and ended up identifying like six more targets.
Peter Bell: Of course. Of course!
Chad Peters: That was pretty eye-opening. This was one of the biggest gold mining companies in the world still doing early stage, scientific stuff. I was pretty impressed by that and that's was part of how we pulled it all together. With our land package, I think that all we have to do is show some positive results and that we are collecting the data the way BARRICK would like to see it done or other groups like KINROSS. There are some really good production companies in the state. SSR, too. We're collecting that data well, which I think gives them a level of confidence in the work that we're doing. If we have any good results, I think that there'd be a good chance for them to come in and want to do something with us on it.
Peter Bell: That stuff SSR is doing in Nevada is very impressive. Big fan of them.
Chad Peters: A couple of my buddies actually work for them. It's been pretty impressive what they've been able to do and since taking over that project at Marigold.
Peter Bell: Paul Stevens Investment Management, an institutional group who also cares about doing things the right way.
Chad Peters: Yes, Paul's been great. He came in the private rounds. He's been huge, made a lot of introductions to other folks as well. We're very lucky to have him as a shareholder. It's been great. And then we have EMX, Vior, and Ethos on the public side. We've got a good mix of shareholders.
Peter Bell: It's good to hear Nevada, too. I'm thinking about the quotes of Bristow talking about, "the next big gold mines will be copper mines" and it's good to see you guys fire back with that there's still gold to be found in Nevada.
Chad Peters: Absolutely. There are still discoveries being made even right now in Nevada. BARRICK just put out in their Q2 results they just announced 20 meters of 35 grams per tonne in their NORTH LEEVILE target. I don't know exactly where that is, but north of the known resource along that LEEVILE corridor that extends up towards our property. They're talking now about how they're going to work on adding it into their resource base. That's a 700 gram-meter hole. That's world-class. And that's within a brownfield district. That's why I think BARRICK made the majority of discoveries in Nevada -- big ones -- there's a lot of great work being done across the board, but we're talking 9-10 million ounce plus deposits that are still being made, primarily, by the BARRICK team.
Peter Bell: Depth -- what depth? Do you have a sense for that hit?
Chad Peters: I know that the lower plate is 800 meters at our project. It's roughly in the 500 to 600 meter at the LEEVILLE deposit, so you can bracket in that range. I would guess that's somewhere in that range.
Peter Bell: Do you think they drilled that from surface or do you think they drilled that underground?
Chad Peters: It's tough to say. They put the dot on the map and it's a 30 square kilometer map, right? I know it's in that general area. It looks like a surface hole -- that'd be my guess but it's tough to say for sure.
Peter Bell: Look at this district. Just mind-boggling. And here you are in Winnemucca off to the west.
Chad Peters: Yes, we live right on the edge of it. We moved here in 2012 and I thought it'd be six months. We didn't even sell our house in Canada. We kept it and thought we would be back here in a year. It's going on nine years now and we have two kids, a dog, and a cat -- we're still in America! We love it here. It's nice to be close to the projects. In Canada, you get people working for month-long shifts where they fly-in and -out. It's tough to have kids, a family, and a home life in any sense. Living here, I can drive to the projects and do the odd bit of camping out down at SELENA because it is a bit out of the way. The other two projects are within 45 minutes of I-80. Pretty good spot to be located.
Peter Bell: It's really important to have the leadership close to the drill bit. Especially in the early stages.
Chad Peters: As a company grows, things can change but now it's all about discoveries. I'd rather be able to be out mapping and doing all that with my team on any given day than worrying about hopping on a plane.
Peter Bell: You have internet and phone connectivity for the most part at your projects.
Chad Peters: It's not too bad at two out of the three. We have LTE on top of the hills at SELENA.
Peter Bell: SELENA!
Chad Peters: SELENA is definitely ratcheting up the priority level the more we get to know it.
Peter Bell: The best projects get better the more you work them!
Chad Peters: That's right. It's oxide -- when you've got oxide gold and silver at surface, it's a good start. If you go to the next slide, you can see where we are. We've got 100% of a 26 square kilometer land package here. If you look to the northwest then you'll see the GOLDEN BUTTE mine. And then if you click on the arrows down at the bottom, it will swing your view over towards the BALD MOUNTAIN mine. You've got BALD MOUNTAIN only 12 kilometers away. It's right up the trend and they're producing 150,000 ounces a year out of that.
Peter Bell: A couple of slides ago we saw BALD MOUNTAIN down in the lower southeast corner of the view. SELENA's not shown on the map with the other two but it's not far away.
Chad Peters: No, it's not. If you were to it takes a bit of a drive just because there are so many mountain ranges in between, but yes it's maybe 100 kilometers down the trend from like the main I-80 corridor you could call it.
Peter Bell: Is this is a highway coming through?
Chad Peters: Those are some pretty good quality dirt roads. There is good access right to the project. We can take a lowboy with an excavator and a semi-truck right up to the edge of the property, pretty much.
Peter Bell: Nice looking land package! What kinds of layers of data on this one already?
Chad Peters: When we came in, there wasn't a lot.
Peter Bell: That's typical Nevada, right? No government surveys or anything.
Chad Peters: We came in and EMX had done a good job of identifying a few targets. They trenched 20 meters of 0.6 across the CHINCHILLA target, which would become our CHINCHILLA zone and that's what drew me to it. They had up to six grams in rock chips and decent grades in trenching. I actually was looking at getting rid of the project when we first got it. It was a package deal that came out of EMX and our land package was $260,000 in land payments. I'd only raised a million and a half Canadian, which at the time was a little over a million dollars US. So, 25% of our budget was going just towards holding the ground?
Peter Bell: That's not good.
Chad Peters: It was tough. I thought that if I can find a good partner for SELENA then that's a good idea, but that changed the first time I brought MIKE HARP down to take a look. He'd been working on the GOLD STANDARD discovery at the Railroad district -- DARK STAR, PINION, and all that. We went down to SELENA with one of the groups that was looking at potentially optioning the ground and we were out at site. MIKE disappears into the bushes and I hear a hammer going. What's going on? I told the guys to give me a minute. When I got over there, MIKE was holding a chunk of rock and it's like pure red jasperoid. He said, "We're not selling this project." I was sputtering about how we already had terms set up on the project. He said, "No, we can't do it. If you sell this project I might as well quit because if we're gonna give away projects that have gold on them I'm out." I was stunned. I said, you realize that's an extra $80 grand a year we're gonna have to pay to hold to this thing? He said that it looks like it has legs to it. We came out, did the tour, took the guys out for beers afterward, and they were ready to sign but we said no. Luckily we have a really good relationship with that team and they've been great. They ended up becoming investors in the company. It worked out well.
Chad Peters: We've done gravity, we've done soils, and we've mapped the majority of the project. At this point, it is 26 square kilometers and we spent most of the spring camping out in a 20-foot trailer that I bought just so the guys could social distance and not have to stay in a hotel or eat out of restaurants. We saved a ton of time, no-one got sick, and we were able to advance the project.
Peter Bell: Good for you.
Chad Peters: The first thing was those trenches. We trenched 50 meters of 0.6 and then we went down the hillside another 100 meters and we trenched 38 meters of 0.75. Pretty high sulfur, so you're starting to get a sense of things pretty quickly.
Peter Bell: Sulphides in some of those?
Chad Peters: Not a bit. Nothing we can identify so far in hand specimens. If you start crushing rock up, then you might find some -- you never know. We did cyanide solubility testing on anything greater than 0.2 grams per tonne across all of our trenches and we saw an average cyanide solubility of 79% percent gold and 65% silver. That's far from a metallurgical study -- there's a whole bunch of other stuff like bottle rolls and column tests would be the next steps once you hopefully find something. For that stage of what we're doing, it shows that this thing is certainly amenable to heap leach processing. Ideally, we find something and let them worry about shaving percentage points off of your recoveries. That's not really what we want to be as a company. We want to make discoveries and show that there's potential to grow these things into large deposits. Then, we'll sell it off to someone at a great valuation, hopefully, who can take it to the finish line.
Peter Bell: Simple!
Chad Peters: In a good market, it's simple. In a tough market -- well it's not simple in any market. It's certainly an easier story when gold's at $2,000.
Peter Bell: Lots of good exposure here, too. The mapping was pretty straightforward.
Chad Peters: It's just pinion pine and juniper trees -- typical Nevada topography. Especially for this area. It's actually our easiest-to-get-around project. Up at the CARLIN EAST, you get up to 8,000 feet on the tops of the hills and it can get pretty rough.
Peter Bell: Some of the ridgelines and stuff around here, it looks like the topography is pretty interesting. Pretty steep up there to the north. Some of those valleys might be interesting spots to pan for gold.
Chad Peters: We're really excited about SELENA. I think we're we just wrapped up our program today, actually. It will be another three to four weeks to get the final assays done, but we're liking what we're seeing.
Peter Bell: A producing mine 12 clicks away, wonderful. Do we have a view on where the trenches were?
Chad Peters: Yes, it should be in the first few slides here. It takes a few seconds to download, which is the only thing I think they could improve for VRify.
Peter Bell: 1980s drilling here.
Chad Peters: That's all the old Kerademex drilling programs that were done a long time ago.
Peter Bell: Pretty limited! Pretty limited coverage.
Chad Peters: And all drilling almost entirely across the pediment, too.
Peter Bell: What's that about?
Chad Peters: You look out there and there is certainly potential. You can see their holes with the geology here. The idea is that the gray rock is the Guilmette limestone and it is covering the Pilot shale as the darker blue, which is regionally the better host rock. ALLIGATOR RIDGE and all these areas -- even the GOLD STANDARD deposits up to the north -- are all hosted within the Webb, which is the analog to the Pilot. That's what everyone was looking for and I think what they did here is to project the Pilot underneath that yellow cover. They were thinking, "We're seeing something on the hillside, let's chase it down the valley." That isn't a bad idea. We're actually doing a similar thing, we're just doing it on different targets down to the south at CHINCHILLA and JUNIPER. Luckily for us, I think they missed some exciting stuff that we're finding now.
Peter Bell: Maybe some obvious stuff, too? It's great to hear about those trenches and think about what you said about BARRICK doing their soils at McCoy-Cove. I'm just looking at this part of the Juniper fault with a couple of holes over there, then all these holes in the pediment but not a lot in between. You always wonder what people were thinking when they stepped over spots like that.
Chad Peters: If you look back at some of the old-timer work, a lot of times there's really good geology being applied to it but there was totally different economics. Even at McCoy-Cove, you could see the age of the drill drilling by how deep it was. You could see it! In 1996, they only drilled to 500 feet. There are 80 holes that stopped at 500 feet, even if those holes were in mineralization they stopped. It was a different time for exploration and there were a lot more hard lines put on things. People may be thinking a little bit more outside the box nowadays.
Peter Bell: Rock chips to get the geochem, right? These are the layers of data that matter.
Chad Peters: And that's our full 3d model on VRify here. You can tilt that up and look around. That is a 3d model of the entire project. Of course, it's going to change probably a hundred times before we get even close to getting it fully right but that's exploration. We've got the CHINCHILLA and the JUNIPER zones. At CHINCILLA, we trenched those great rock chips. JUNIPER is a parallel zone where we're seeing up to 16 and a half grams of gold in jasperoid. And up to 1500 grams per tonne silver. Those are incredible grades at the surface. In my nine years in Nevada, I've never come across consistent, high-grade gold at the surface like that. The next the main thing for us is on the next slide, which shows the trenches you're asking about. That's what trench five looked like, coming across. I remember the first few times I was out walking on the outcrops themselves -- they are just weathered dark gray. Pretty silicified and didn't look all that terribly exciting, to be honest. Only when we ripped it open with a bulldozer did we actually see the potential continuity. EMX had sampled 20 meters and they'd gotten a zone that was about 20 meters wide. We went across that, perpendicular to what the projected zone was, and we were able to significantly grow that width.
Peter Bell: And you think this is across based on the geology here. This is not along -- that 50-meter trench is not along the zone?
Chad Peters: No. Eventually, we figured that the true width was about 90-95 percent of the trench. You can see there was an old disturbance there on the other side of the trench. Back in the 1990s or 80s, they trenched like 300 feet off of the fault zone for some reason. If you go out that fault zone area, we actually found that our soil anomaly was huge right where they were trenching. The reason that soils anomaly was huge was that it's on the side of the hill and all of the material that had been eroding off the hillside sloughed down there. They saw a huge soil anomaly and trenched across it. They came up empty-handed. If they'd have been three to five hundred feet up the hill, they would have actually gotten into the real zone that had been eroding off that hillside. Funny stuff like that that can happen at times.
Peter Bell: There's a lot of exposure for you to work on now and keep doing this approach.
Chad Peters: Exactly. SELENA's kept on surprising us, I guess. It was the redheaded stepchild for a while. It wasn't getting a lot of love from our team in the early days. I wasn't marketing it heavily as something we were terribly excited about in the early days of the company. When you're trying to raise money with speculators in Vancouver that actually know the business most of them don't get too excited if you say I think this might have a 500,000oz discovery potential. It doesn't really move the needle for them. They saw SWIFT and CARLIN EAST and said, "Wow, that could be 10 million ounces if you're right" but what we're finding now is that SELENA has significantly greater potential than that initial 500,000 ounces that I put on it as that rough target. That still could be a useful target, but we think there's more scale than that to the system now.
Peter Bell: Oxide at surface, right?
Chad Peters: Every half gram per ton at surface of oxide is worth significantly more than 10 grams per ton a thousand feet down.
Peter Bell: Totally. Especially if it's refractory, right?
Chad Peters: It can take anywhere from forty to fifty dollars a tonne to process refractory rock, like at the GOLD STRIKE mill, for example, where BARRICK has a toll milling contract. With this oxide material, you can throw a heap leach pad together and process that for like five or six bucks a tonne.
Peter Bell: And BALD MOUNTAIN nearby -- is that a heap leach or what do they do in there?
Chad Peters: That's primarily heap leach. I believe they also have a small mill because I think they have a mix of both oxide and some refractory ore. It's actually a different deposit type -- it's more of an intrusion-related system. It's not a true Carlin system. Right beside it is the ALLIGATOR RIDGE mine, which is more of a true Carlin system. You tend to get Carlin systems associated with large intrusive systems in Nevada. The proximity of BALD MOUNTAIN to ALLIGATOR RIDGE, YANKEE, and all these other Carlin-type zones shows that the systems are all interacting.
Peter Bell: Are you thinking of going up around Starz fault or some of these other areas up into the higher elevation at the project here? Is there any indication?
Chad Peters: To be honest, it's getting better down the hill. As you head out into the pediment, you're actually getting into the yellow cover that we saw in that geologic map before and that is actually covering fully-preserved Pilot shale, which is typically the better host rock. The system tends to be increasing in strength down the hill. Soils support that. Our mapping supports that before we lose it in gravels and stuff like that. When I say cover, we built multiple pads on this pediment and we're getting into bedrock within three to five meters. We'll be digging a three-meter deep sump and we'll hit bedrock rock at the bottom of it. It's not heavily covered, but it has got a little skin of gravel on top preserving what we think is a covered system underneath.
Peter Bell: I love how much action you can get out of just an excavator here, too! Isn't that just great?
Chad Peters: Pretty incredible, yes. I have worked in the Arctic, worked in Red Lake, and worked in northern Canada for years -- the first seven or eight years of my career were pretty much working in every bush camp known to man in northern Ontario and getting chased around by bears and moose and stuff. To be able to come down here and explore like nine or ten months of the year and have pretty much surface exposure is amazing. You're not walking through a swamp to go and try to look at an outcrop or something. Nevada is pretty special from that standpoint.
Peter Bell: And just off the highway. Doesn't look like there's too much good road in here, but there's some road a little bit.
Chad Peters: You definitely have access. Two-track access. It's not a bad gravel road. I towed my 25-foot travel trailer onto the site in the spring with the guys. If it's good enough road to get a hitch trailer in there, then I think you're doing all right.
Peter Bell: Speaking of buying things like a trailer, sometimes companies go and buy drills. Any sense of buying an excavator and parking it out here to have it going?
Chad Peters: With the amount that I've seen those things break down, I'd rather rent. The beauty of that is if one breaks down, then it's on them to fix it.
Peter Bell: Whether it's the blade or the track or the engine, there are all kinds of things that could be a nightmare.
Chad Peters: Exactly. We've tried to cut costs wherever we could. We got the drilling contract. We've collected our own soils. We're still collecting. Mike's cousin Tony is awesome -- he ended up coming down and has been collecting soils for us all summer. He's incredible. I think I was able to average like 15 to 20 samples a day and he averaged with like 35. All right, you go ahead and do that -- you're doing great. We're cutting costs there but I would probably stay away from buying an excavator. I broke too many of them.
Peter Bell: And here are the pathfinders lighting up here downslope, as you said. This basin up here looks pretty dead.
Chad Peters: We don't have soils up in the very top north corner. Where it cuts to the north, we've actually infilled since then -- in between all those gaps. But everything north of the CHINCHILLA remains to fill in with the next phase. That's the BROKEN EGG target you're pointing at right there and that's a pretty exciting target that we haven't had a chance to work on yet. The goal is to prove that CHINCHILLA and JUNIPER have some legs to them, and then we'd love to stretch out and start putting a couple of test holes and doing some work up in the BROKEN EGG area. That's a three-kilometer long soils anomaly and when you look at the arsenic contours the purple is a thousand to three thousand PPM. Just to put that in perspective, the average arsenic values in the trenches of CHINCHILLA are 0.6-0.7 grams per tonne. The BROKEN EGG zone were in the range of 100 to 1,200 PPM arsenic. You're seeing bleed-up from a system beneath and it's showing that much strength in the system. We're seeing it at structural intersections, which is exactly what you want to see. That's where you're getting that structurally-controlled leakage coming up from a deeper system below it. We're seeing all the right things, it's just a matter of going and working it now.
Peter Bell: Wonderful. And some hot grabs in there, as well. 16 grams gold, five grams gold, six grams gold. Was that you guys or was that historic?
Chad Peters: That was us. That was actually Mike and Gabe, our two geos. We got 1,500 grams silver and with the way silver's performed lately, that's like 10 grams per 10 gold equivalent.
Peter Bell: Were those rock grabs or soils?
Chad Peters: The triangles are rock grabs and then the soil contours represent the soil samples on a 100-meter grid. Gabe is our new geo and he's fresh out of school -- he's about a year out of school now and he's been incredible. He's asking, "Do I try to get the grade? What's the goal?" I said, of course, we want it to be high-grade but it needs to be representative. Don't high-grade it, just go up and take as many samples as you can. Then, it'll come out what the grade is, right?
Peter Bell: It's a process! As you said, do as many as you can and then go back the next day and do some more! That's the point, right?
Chad Peters: That is the statistics of it all. I think we took 91 samples in the JUNIPER area and the average gold grade was 0.47 gold and 47 grams silver. Out of 91 samples shown by all of those triangles through there, we still managed to be almost a 0.47 gram per tonne average grade. Of course, that's pretty heavily skewed by a few 16 and a half gram samples in there. That doesn't hurt, but that's been our big focus this spring. Now that we're done with the second phase of SELENA drilling, we're really going to hit SWIFT and CARLIN EAST hard. That's the next phase.
Peter Bell: And as you move on from the discovery phase, it's always important to think about mine-ability. What's the size of a pit here versus the size of the project area? Always trying to come back to scale bars and having some sense of intervals of distance -- how big would a small pit would be here? How big would a big pit be? And what would that look like versus the topography? Lots of important stuff like that.
Chad Peters: That's a really good point. You've got to watch out if someone announces a new discovery where they've drilled eight holes all within a hundred feet of each other -- they've pin-cushioned a little area. If they say this is gonna be a huge discovery, then watch for them to step-out. Can they show that this thing has scale to be a kilometer long and a half kilometer wide, or otherwise get some real scale to it? If not, then the chances of it actually ever being anything meaningful are very low. The way we're designing this program right now at SELENA is doing just that -- we're planning a lot of wide-spaced scout drilling trying to hone in on where the heart of the system is because we got a kilometer and a half between CHINCHILLA and JUNIPER. There could be a zone sandwiched anywhere between that could actually be the main part of the system!
Peter Bell: Wonderful. It's great to see this section underlaid below the surface there. And that jasperoid breccia unit you were talking about, how it outcrops over here and then dips along the Juniper fault? That's right around the area where you were doing your trenching.
Chad Peters: That's a to-scale cut from our Leapfrog model. That's a 3d model where you can turn it into almost like a hand-drawn section in Leapfrog. All of the things that we're doing there are to scale -- that's actually our 3d model that we're now planning to drill off.
Peter Bell: Are these meter bars or feet?
Chad Peters: Those are meter bars. We've done everything in meters just to keep life simple, but you'll probably notice I switch between metric and imperial non-stop. It drives people crazy.
Peter Bell: Tough being in Nevada -- you can't make anybody happy! What an interesting area. I'm just thinking about pitting into the side of a slope there and the distances on that section -- seeing a 500-meter interval from 1300 to 1800 meters on the horizontal axis. Then coming along the downslope with that unit at surface -- what a great setup. And the grabs that you have at surface already show grade. The geochem, as well, shows more potential. A great start!
Chad Peters: It's got us excited. For the sake of not having too many forward-looking statements, it's showing us all the right stuff. You're seeing all the right set up for something pretty exciting if we can prove the concept.
Peter Bell: Always good to see the rock unit that you're interested in dipping with the slope -- just to point that out as well. You're not fighting against the topography.
Chad Peters: Exactly. The zones are outcropping at surface. If we can prove any positive news down underneath cover, then you just start from surface and work your way down. It's a good scenario for sure.
Peter Bell: I can see why it's taking a place of priority. To have stuff at surface is always a good start -- safe start. Oxide stuff is simple, too.
Chad Peters: It's something that people can get their head around pretty quickly. You mentioned before that our market cap is about $30 million today. What can we do to support that valuation so we can go out and test concepts at SWIFT and CARLIN EAST? We will eventually have holes that miss. I've been part of multiple discoveries in my career, so has Mike. You rarely if ever hit it on the first hole. It's very rare, but if you're doing it right then you're gonna hone-in on where you're seeing the right things. You start getting stronger alteration or mineralization and maybe after two holes or five holes or ten holes, you stack it and that's when it takes off. What we would like to see is this -- we think SELENA has the ability to show that we're adding value. We're doing exciting work. And that gives us a bit of freedom to go out and drill holes at SWIFT or CARLIN EAST to advance those projects without feeling like everyone's expectations are focused just on those two projects, which are still very early stage.
Peter Bell: And they're somewhat more esoteric, too. They're more niche. You really have to know Nevada to understand them in some ways. A lot of people can wrap their head around an oxide gold deposit at surface.
Chad Peters: Oh, for sure. And there's a reason that we had $12 million in orders in the first seven days on our IPO. I think we were able to get across just how big the blue sky was at some of these projects, but at the end of the day everyone circled back to say "I really like what you're doing at SELENA". These other ones have that potential to really change the company significantly, but SELENA is that simple concept that everyone can tag value on. And there's a lot of good examples of what the value could be, whether it's in already operating or ready-to-be-sold comparable deposits in Nevada.
Peter Bell: And you can plug a lot of holes in there and talk about your drilling contract.
Chad Peters: Yes, we can flex our muscles the most at SELENA out of any of them.
Peter Bell: Would you do RC drilling there?
Chad Peters: Yes, as we're above the water table. The big thing with RC is if you get below the water table, you really run the risk of downhole contamination. If you're in the water table, gold is trapped in the fines -- very fine clays and dust within the rock -- when you hammer in there with an RC bit and just shatter everything, it releases those fines into the water. They can drift down-hole and you can end up smearing your grades down large intervals. RC is an incredibly useful exploration tool if you're above the water table. You can certainly drill off a resource with RC and then just pepper it in with core to make sure you validate the resource. If you start getting into SWIFT or CARLIN EAST, then what we do is switch to core tails, which means we drill an RC pre-collar, case that collar with steel pipe down to maybe 1500 feet, and then drill the last 500 to 1000 feet of the hole with core. That eliminates the bad ground conditions above, so you're not getting the hole caving-in on yourself. And you can drill that first 1500 feet for a fraction of the price. Then, we finish it off with core, which no one can doubt the quality of a core value. You drill core through a target and you hit -- you can't doubt it. If you drilled an RC hole down 3,000 feet then you're in the water table -- if you hit 20 meters of 10 grams there's always that question of whether that is real or is it 2 meters of 20 grams? Depending on the target, you'd certainly have to be careful. If we have a good hole at CARLIN EAST then we'll follow up with a core twin before we even release the data.
Peter Bell: And I just mean at SELENA. That's just RC with the shallow targets in oxide domain.
Chad Peters: RC chips are great, especially in oxide systems. They can be so altered sometimes that they're just clay and RC is a perfect way to come in, hammer it, see what you can get out of it, then you go from there.
Peter Bell: Clay can be one of the things that becomes a problem with heap leach circuits.
Chad Peters: Certainly. It was a problem at Pan about 50 kilometers away. I know they struggled with their clays.
Peter Bell: Good to know the things that can go wrong sometimes you see these management teams in Vancouver and something's not working -- maybe they don't know why. It can take a while to figure it out. It can be really frustrating to have that when it's just basic stuff to some people.
Chad Peters: It can be very basic, but at the same time it's a tough business. It is actually a very simple concept of how to make a discovery -- how to advance it, how to do it right -- but there are so many things that factor into it that can throw a wrench in the wheels. Whether it's a shareholders or someone making a hostile takeover or anything.
Peter Bell: It's usually something at the drill bit! I often see it as something wrong at the drill rig -- somebody collared in the wrong place or they are using the wrong drill rig.
Chad Peters: You're only as good as your last hole. Rarely, if ever, does the deposit and the resource end up meeting the expectations of the shareholders or management and all that stuff. It's just the nature of the business. You may drill into something and think, "Hey! This could be five million ounces." And then you end up realizing it's two and a half. That could still be a damn good deposit but you've if you haven't messaged it and set expectations appropriately in the market then you could have something that's really exciting end up falling flat because someone was expecting twice as good. At SELENA, I think there's serious potential. Do I think it's going to be a 10 million ounce deposit?
Peter Bell: Probably not.
Chad Peters: Probably not, but anywhere in that range as an oxide deposit Nevada is incredibly valuable. We're not just trying to make sure that we define scale first, then work our way into what could this thing be worth, and are we going to be the ones to advance it, or are we going to find a partner that can do it better?
Peter Bell: And people talk about those dollars-per-ounce-multiples in takeover scenarios. Cool stuff, for sure. I love to just point out people think oh a high-grade system is going to have a bigger premium, well we talked about it already. What if it's down a thousand feet or down a thousand meters? Watch out below!
Chad Peters: Large margin matters. LONG CANYON was one of the last big open pittable deposits that has been found in Nevada lately. Mike was actually involved with the group that found a couple of million ounces of actual competitive material and they were like 250 bucks an ounce in a takeover. Check the math on it, but they were well over a couple of hundred bucks. But the Cove CSD-Gap deposit was different -- with the de-watering that was required and the fact that it needed to be milled, the takeover price was less. It was 1.6 million ounces of 12 grams per tonne but at the end of the day at I think it got 150-180 dollars per ounce. It was $145 million NPV. But I'd like to stay away from all those economic details for now. I've been through it. I've done multiple resources. I led the PEA at the CSD gap. There's certainly value in doing all that work, but that deposit was valued far higher six holes in when we were hitting 30 meters of 8.9 grams.
Peter Bell: The Lassonde curve! The classic Lassonde curve.
Chad Peters: I probably sound like a broken record. I hit on that all the time, but that project was worth more in the early stages. It's still a great project. Somebody's going to mine that deposit as gold keeps on ripping up.
Peter Bell: And that'll be going for 20 years. These are decades of mine life that we're talking about.
Chad Peters: Sometimes good explorers don't make good producers. The way my brain works is different -- I remember doing the PEA at PREMIER GOLD. I remember when the engineer got super excited because he found a way to shave two pennies off our milling costs. Everyone was like high-fiving -- this was a big deal! I was sitting there thinking that this is a different world. There's a lot of value in production. Once you get past that development stage and the Lassonde curve, that's where the full value gets added to the project but I'm perfectly happy to sell it at what would be some people might consider a discount -- we'd rather move that into another discovery.
Peter Bell: And if you can have a carried interest then that helps! You talked about having a 40% stake -- if that can be a carried interest while they spend the $10 million or $50 million to do the development work.
Chad Peters: Or negotiate the pennies!
Peter Bell: Yes, that's a great place to be. All of a sudden, it's RIDGELINE ROYALTIES.
Chad Peters: Exactly. PREMIER did a good job. GSA spun a royalty company out of PREMIER like 10 years ago.
Peter Bell: Great Bear did one too. A well-worn path.
Chad Peters: Every deposit that I've worked on has had a different point where the value hit is highest. It wasn't always six holes in, but I think I was lucky enough to be a part of over 12 million ounces of discovery with PREMIER over about 10 years. I started as a junior geo, fly on the wall, and then had more responsibility consecutively running projects, etc. They were a great team and you can see some projects like COVE -- I truly think that if we tried to sell that 10 holes in, we probably would have gotten more value for it than now, although that's changing with the gold price going to $2,000 and I'm probably going to put my foot in my mouth pretty soon.
Peter Bell: Well, it sure would have been quicker! Crystallize it years ago and move on to another one. You can always find more opportunities. Once you get one done, you can move on to the next thing.
Chad Peters: That it's exactly. We want to stay firmly in that discovery side of the Lassonde curve. A strong gold market make that a very easy statement to make. Times change and we may have to adjust, but that's where we are right now.
Peter Bell: I see phase two drilling -- a thousand meters planned for CHINCHILLA and JUNIPER at SELENA.
Chad Peters: I think we ended up doing about 1,100. We were wrapping that up, so results are about three weeks out.
Peter Bell: How was it doing drilling while you were doing the IPO? I would think some lawyers would tell you not to do that because it's a moving target. If you get hot results.
Chad Peters: In our prospectus, we disclosed phase one drilling results, which we completed in June. That allowed us to market the phase one results. And then drilling during the IPO wasn't an issue, as long as we didn't announce that we were drilling until after we closed the IPO.
Peter Bell: Bullish!
Chad Peters: The lawyers said, "Here's your window. If you miss it then you're in trouble. You need to do this right, you can't pre-market the IPO." We didn't do any of that. The whole point was we wanted to come right out the gate with some results. We're betting that we can deliver on that. Hopefully, it doesn't fall flat.
Peter Bell: A thousand meters -- was that 100-meter holes?
Chad Peters: Anywhere from 75 to 125-meter holes.
Peter Bell: Wonderful, I love those depths. That's a pretty high-confidence program right. And you can get a few kicks at the can with that setup, too.
Chad Peters: Exactly it's trying to prove a bit of proof of concept for the larger potential of the project, too.
Peter Bell: Amazing. And here's that same one we were talking about on the first slide, looking down at the big pit from the hills up on your ground. What a spot to be...
Watch for more from this detailed conversation with Mr. Chad Peters, President and CEO of Ridgeline Minerals.
